Tips for surviving the ongoing economic downturn in the construction market
By now, many construction-related businesses in this country have reached a similar point on the so-called “work flow” curve. New projects are scarce and fiercely competitive to secure. Backlog lists have been carved down to the bone due to temporary project shutdowns or outright cancellations. In other words, the kitchen cupboards are bare, and electrical design and construction firms are scrambling to find ways to keep food on the table and restock their pantry shelves.
Unfortunately, any hopes of recovery we may have held onto earlier this year appear to be quickly fading away. Now, it appears there's even concern for any kind of real recovery in 2010. Following are just a few examples of the ongoing obstacles. The latest construction forecast from FMI, headquartered in Raleigh, N.C., projects total construction spending to be down 13% at the end of this year and another 7% in 2010. Late last month, Reed Construction Data revised its economic forecast data and noted non-residential construction spending would decline 2.8% this year and another 2.2% next year. It also noted that residential construction spending would bottom out this year (falling another 28.3%) and finally begin to recover in 2010 (+10%).
Could it get any uglier? I sure hope not. The ultimate question on most everyone's minds these days has to be, “What can I do to survive during this difficult time?” One approach is to emulate the strategies employed by other successful firms in the industry, such as our 2009 Top 50 power players, featured in this month's cover story, starting on page 26.
What are our heavy-hitting electrical contractors doing to maintain their stature during this drastic downturn? Interestingly enough, our annual Top 50 report, “Survival of the Fittest,” reveals these large contracting firms held their own in 2008 because of their continued work on closing out large projects as well as relying on the strength of their project backlog inventory. Nevertheless, few of our Top 50 participants are forecasting a revenue gain this year, and 43% are predicting a revenue decrease of more than 10%.
To help offset these declines in revenue, they're leveraging their earlier moves to diversify into new market segments and expand into new geographic territories. They've looked for ways to improve back office efficiency and streamline work practices. They're also being selective with the jobs they do bid on and exploring ways to improve their brand image and marketing efforts.
As most business consultants will tell you, a tough economic time is actually the best time to leverage your personal relationships with clients. This is the time to rally everyone in your organization on promoting this goal, make contact with current customers, and rekindle every old relationship you can. Don't be afraid to sing your own praises either. Sharing your recent success stories with potential customers — explaining how they could benefit from the same type of strategy or project solution — just might get your foot in the door for some new business. In other words, spread the good news as best you can. Do whatever it takes to remain positive and upbeat in the eyes of your current and potential customers as well as your employees. In the end, you may find that the old adage, “Attitude is everything,” may prove to be more than just a motivational saying.